K-1 business income and support

K-1 business income in Michigan divorce, alimony and support cases. (c) 2015 


Many tax returns contain schedules.  If your spouse has business income, then the income is reported on schedule K-1.  Schedule K-1 provides information regarding a business owner or partner’s share of income, deductions and credits.  Schedule k-1 business income is an Internal Revenue Service form that requires disclosure of business income under oath and K-1 business income should always be considered when determining income for child support and alimony.

A corporation must report ordinary business income (loss) on K-1 form 1120S and a Partnership or L.L.C. must report ordinary business income or loss on form 1065.

Line 1 on both K-1 business income forms provides a disclosure of ordinary business income or loss for a taxpayer.  However, if you stop at line one without looking further, you may be overstating or understating a person’s income.  In order to determine income available for support, a calculation must be performed to determine if the ordinary business income was made for the purpose of offsetting a tax liability or is business income realized by the taxpayer.

While a qualified accounting expert is best qualified for the calculation, on K-1 Form 1120S, subtracting line 16 from line 1 will typically provide the ordinary business income (loss) available for support.  On K-1 form 1065, subtracting line 19 from line 1 will typically provide the ordinary business income (loss) available for support.

When preparing child support or alimony calculations, every dollar counts.

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